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taxadvisor.uk, Chartered Certified Accountant
Category: Tax
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Experience:  FCCA - over 35 years experience as a qualified accountant (UK based Practitioner)
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I am buying a car . The retail price is £26,540.00. I use

Resolved Question:

I am buying a car . The retail price is £26,540.00.

I use my car approx 30% of the time for business for my LTD company. I am soul director.
Can my business give me 30% - sometimes greater- of the retail value - £7,962.00 towards the retail cost upfront as an allowance. Or do i get it out as a reimbursement after purchase of car as an operating cost leant by me to the company?
I look forward to your reply.
Submitted: 3 years ago.
Category: Tax
Expert:  taxadvisor.uk replied 3 years ago.
Hello and welcome to the site. Thank you for your question.

Is it your intention to buy the car in company's name or as a personal vehicle and recharge the company for business use?

How many business miles do you do in a year?

Many thanks
Customer: replied 3 years ago.

Hi Thank's,


 


Personal vehicle but I use it 30% for business. eg last tax year did roughly 12000 miles personal - 3940 miles business.

Expert:  taxadvisor.uk replied 3 years ago.

Thank you for your prompt reply.

You did just under 4,000 business miles last year and this equates to just under £1,800 (tax free) in mileage claim, if you were to charge the company for use of own car.

As the vehicle is your possession and not a company asset, any contribution towards it upfront or in the form of reimbursement would be deemed a payment to you that would be taxable, unless it is

- Repayment of director’s loan a/c

- Salary (taxed at source)

- Dividend out of taxed profits

The operating cost of a vehicle that is not a company asset would be made up of payments to you for business mileage claimed based on your mileage per annum.

I hope this is helpful and answers your question.

If you have any other questions, please ask me before you rate my service – I’ll be happy to respond.

Customer: replied 3 years ago.

Thanks,very helpful,


But that now worries me as the company last year reimbursed me 30% of petrol and 30% maintanance. was this wrong to do so?

Expert:  taxadvisor.uk replied 3 years ago.
Thank you for your reply.

You should carry out an exercise to ascertain what would have been more beneficial to you - reclaiming
- 30% of petrol and maintenance costs or
- mileage based on HMRC tax free mileage rates.

Was this your first year of reimbursement?

I would not unduly worry about what has happened in the past but consider how you should claim for business mileage in future.

As this is a new vehicle, you should apply your choice of method consistently over the life of the vehicle and not chop and change as it suits you.

I hope this is helpful
Customer: replied 3 years ago.

Hi again - last question - promise - they HMRC wont tax me on that reimbursement of petrol and maintenance costs will they ?

Expert:  taxadvisor.uk replied 3 years ago.
Thank you for your reply.

The short answer is NO as you would be able to demonstate that the value equated to business use of the vehicle.

I hope this is helpful.
taxadvisor.uk and 2 other Tax Specialists are ready to help you
Expert:  taxadvisor.uk replied 3 years ago.

I thank you for accepting my answer.

Your reward of a bonus is greatly appreciated.


Best wishes.

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